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James Poterba

James Poterba. MIT and NBER . Adjusting Institutions for an Aging Society. Heterogeneity in Male @ 65 Life Expectancy . Source: Waldron (2007). Sample: men w/positive earnings, ages 45-55. Relative Incidence of Disease by Education Status. Source: Smith (2014).

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James Poterba

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  1. James Poterba MIT and NBER Adjusting Institutions for an Aging Society

  2. Heterogeneity in Male @ 65 Life Expectancy Source: Waldron (2007). Sample: men w/positive earnings, ages 45-55.

  3. Relative Incidence of Disease by Education Status Source: Smith (2014).

  4. Sources of Income, Individuals 65+, 2013 Mean Income = $6756 Mean Income = $78180 Source: Poterba (2014).

  5. Household Balance Sheets, 65-69, in 2008 Source: Poterba, Venti, & Wise (2013).

  6. Labor Force Participation Rate, 65-69 Year Olds, 1963-2011 Men Women

  7. Expected Years of Work and “Leisure” @ 65 Source: Ghilarducci (2008) with updates.

  8. Expected Years of Work and “Leisure” @ 65 Source: Ghilarducci (2008) with updates.

  9. “Risk Points” in Retirement Saving • Employer Decision to Offer Retirement Plan • Employee Decision to Participate and Amount to Contribute • Early Withdrawal Risk: Loans and Lump-Sums Plan Risks • Drawdown Pattern: Annuitize or Not? • Financial Literacy is a Challenge for Many

  10. Financial Literacy • If $100 earns 2% per year for five years, how much will you have in the account? (< $102, $102, < $102) 67% correct • If the interest rate on your saving account is 1% per year, and inflation is 2% per year, in a year, can you buy more, the same, or less? 75% correct • True or False: Buying a single company stock usually provides a safer return than a share of a mutual fund. 52% correct • All three correct: 34% • Source: Lusardi and Mitchell (2014).

  11. 401(k) Participation Before & After Automatic Enrollment Enroll After Before Source: Choi, Laibson, Madrian, and Metrick (2004)

  12. References • D. Choi, D. Laibson, B. Madrian, and A. Metrick, “For Better or For Worse: Default Effects and 401(k) Savings Behavior,” NBER WP #8651. • T. Ghilarducci, When I’m Sixty-Four. 2008. • A. Lusardi and O. Mitchell, “Economic Importance of Financial Literacy,” Journal of Economic Literature 2014. • J. Poterba, “Retirement Security in an Aging Population,” American Economic Review 2014. • J. Poterba, S. Venti, D. Wise, “Drawdown of Personal Retirement Assets,” Journal of Economic Perspectives 2013. • J. Smith, “Using International Country Data to Learn About Health,” Presentation at National Institute of Aging Conference, 2014. • H. Waldron, “Trends in Mortality Differentials and Life Expectancy…,” Social Security Bulletin 2007.

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